staugustine.com: Archive

NEW YORK -- Manufacturing activity dipped in March for the first time in five months, according to a report released Tuesday that suggests war jitters are holding the economy back.

The negative manufacturing numbers were released on the same day the federal government reported that construction spending dropped in February --providing further proof that the economy stalled in the first quarter of 2003, some economists said.

Economists say the progress of the war will determine, in large part, whether the economy recovers or retrenches.

"Clearly, going into the war, the economy was losing momentum," said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis. "Businesses believed there was no reason to take a risk in investments with the onset of war at hand."

Starbucks pulls out of Israel, ends joint-venture

SEATTLE -- Starbucks Coffee Co. on Tuesday closed all six of its shops in Israel, blaming "operational challenges" and not the turmoil in the Middle East.

The coffeehouses were in Tel Aviv and employed about 120 people.

"In Israel, it was clear to us that this was not a very good time to build the business," Chairman Howard Schultz said Tuesday.

Neither Starbucks nor the Delek Group of Israel would disclose why Starbucks chose to dissolve their partnership. The two had formed Shalom Coffee Co., which was 80.5 percent owned by Delek and 19.5 percent by Starbucks Coffee International, a Starbucks' subsidiary.

Shalom opened its first store in August 2001, several months into a recession that continues.

Analysts said the closings aren't a major setback for the company, which eventually wants to have 25,000 stores worldwide. Starbucks has other outlets in the Middle East, including in Bahrain, Lebanon, Qatar and Saudi Arabia.

American Airlines to lay off 2,500 pilots, union says

FORT WORTH, Texas -- American Airlines will lay off 2,500 pilots over the next year as it cuts costs in hopes of staving off bankruptcy, union officials said Tuesday.

About 21 percent of American's 12,000 pilots will lose their jobs, with cuts beginning at the bottom of the seniority ladder. Pilots can be recalled within two years if the airline, the world's largest, adds jobs.

The cuts were announced by officials with the Allied Pilots Association, which has agreed to $660 million in annual concessions to help save the company from bankruptcy. Pilots' salaries also will be slashed 23 percent beginning May 1 and 17 percent annually over the rest of the six-year contract, said John Darrah, the union president.

WORLD REPORT

U.S. military opens psychiatric wing at Guantanamo

SAN JUAN, Puerto Rico -- A terror suspect attempted suicide at Guantanamo Bay Naval Base in Cuba and was being treated at detention camp's new psychiatric ward, officials said Tuesday.

The man was saved by guards within seconds of the attempt in his cell late Monday, Army Lt. Col. Barry Johnson said.

There have been 24 suicide attempts by 17 individuals since detainees began arriving at the remote naval base in eastern Cuba in January 2002, officials said. None has been successful.

Johnson refused to provide further details of the suicide attempt but said that "most of them are by self-strangulation."

He said that the detainee did not suffer "significant injury" and remains under observation in psychiatric facility, which opened March 23.

Mudslides in eastern Indonesia kill 27

JAKARTA, Indonesia -- Mudslides triggered by flash floods in eastern Indonesia killed 27 people with at least five others reported missing, local officials and police said Tuesday.

The floods swept away 17 houses on Flores island, 1,030 miles east of the capital of Jakarta, said Paulinus Domi, head of the local district of Ende.

Police said they were searching for survivors late Tuesday in three villages hit by the flooding.

The mudslides also damaged bridges, cut off phone lines to remote villages and forced authorities to close the local airport. Domi said the floods rushed through the area around 10 p.m. Monday night, while most residents were sleeping. More than three feet of fast-moving water rushed down from Meja Mountain and carried away everything in its path.

Flooding and mudslides have killed more than 100 people on several Indonesian islands since the current rainy season began in late November.

Rockets fired at U.S. forces in Afghanistan

KABUL, Afghanistan -- Rockets were fired at two U.S. bases and a mine damaged an American Humvee, but there were no injuries the incidents, officials said.

The armored Humvee struck the mine late Monday near the southern city of Kandahar, the U.S. military said in a statement from its headquarters at Bagram Air Base, north of the capital.

No one was injured. The mine caused major damage to the front end of the vehicle.

Northeast of Kandahar, two rockets were fired Monday at a U.S. base. Later, another rocket was fired toward a U.S. base at Orgun in the eastern province of Paktika. None of the rockets hit caused injuries or any damage to buildings.

Rockets, many Chinese-made and connected to crude water timers, have been fired frequently at coalition forces based in southern and eastern Afghanistan.

Japanese officials contradict each other on N. Korea

TOKYO -- Japanese officials contradicted themselves Tuesday about whether North Korea actually test-fired a missile earlier in the day, a gaffe that comes as Tokyo tries to show it is keeping better tabs on the North in the middle of a nuclear standoff.

In Washington, a Pentagon spokesman said North Korea fired an anti-ship missile but it was not considered a threat. "We are aware that North Korea launched an anti-ship cruise missile from its west coast," Lt. Cmdr. Jeff Davis said. "While we are not alarmed by this, it is not particularly helpful, either."

But as of Tuesday night, Japan still had not said definitively whether it believed the missile was fired. It was not the image Prime Minister Junichiro Koizumi's government wanted to project to a nation worried about the threat posed by increasingly sophisticated missiles being developed by North Korea.